This Bargain ETF Covers the Entire Market

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

Following last week’s introduction to exchange-traded fund (ETF) provider Vanguard and its low-expense-ratio funds, we turn our attention today to an offering with a 0.05% expense ratio, Vanguard Total Stock Market ETF (VTI).

VTI is the second-largest ETF among Vanguard’s offerings, and its highly cost-effective expense ratio is noted by Morningstar Inc. to be 95% less than the average expense ratio of funds of its type.

This ETF, as its name indicates, rises and falls in conjunction with the overall stock market. To achieve its results, VTI samples an index representing the investable U.S. stock market, including large-, mid-, small- and micro-cap stocks. This approach gives VTI a broadly diversified selection of securities that approximates the key characteristics of the full index.

VTI has risen 0.50% this year, though it was doing better before a recent decline, as seen in the chart below. It also offers investors a dividend yield of 1.78%.

VTI_101514

As a reflection of the overall market, VTI has holdings in nearly every major sector, though its largest allocations are to technology, 17.40%; financial services, 14.30%; and healthcare, 13.56%. This fund’s top 10 holdings possess 14.14% of its total assets, with this list composed of recognizable names, including Apple Inc. (AAPL), 2.78%; Exxon Mobil Corporation (XOM), 1.92%; Microsoft Corporation (MSFT), 1.52%; Johnson & Johnson (JNJ), 1.32%; and Wells Fargo & Company (WFC), 1.22%.

Many providers offer ETFs which track the progress of the overall stock market, but VTI, similar to all Vanguard funds, stands out due to its relatively low expense ratio. If low management fees appeal to you, you may want to keep in mind Vanguard Total Stock Market ETF (VTI).

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

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In case you missed it, I encourage you to read my e-letter column from last week about Vanguard, the low-cost ETF provider. I also invite you to comment in the space provided below.

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With everyone seemingly packing up and rushing to get out of equity positions, things are getting rather crowded at the exits.

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